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The real world is complicated and it is difficult, in practice, to determine the appropriate market view, expected rate of return, and risk. There is no definitive answer to these questions because your answer will depend on the assumptions you make and the methods you use. State your assumptions clearly and say why you make them: state your methods - which equations are you using from the formula sheet, and why; display your working: let the marker see your thinking. Arithmetical mistakes will not be penalised (unless they result in implausible answers). Think about your answer - does it seem plausible? 6. (10 points) In April of last year, the market view on the FTSE100 index from an analyst is given below: Probability Scenario FTSE100 Return 0.7 Bull 20% 0.2 Neutral 5% 0.1 Bear -30% Page 4 of 10 N1553E Theory of Investment Discuss your market view on the FTSE100 for the coming year. Make clear what your subjective probability for each of the possible market scenarios is and their corresponding returns for the index. Although it is your subjective market view, you need to defend it by the most recent macro-economic news, references and/or your history data analysis. History data is available from internet sources (for example, https://finance.yahoo.com/quote/%5EFTSE%3FP%3DFTSE/history?period1=14289696 00&period2=1586822400&interval=1d&filter=history&frequency=1d). Based on your market view, calculate the expected rate of return for the FTSE100 index and its standard deviation for the coming year. The real world is complicated and it is difficult, in practice, to determine the appropriate market view, expected rate of return, and risk. There is no definitive answer to these questions because your answer will depend on the assumptions you make and the methods you use. State your assumptions clearly and say why you make them: state your methods - which equations are you using from the formula sheet, and why; display your working: let the marker see your thinking. Arithmetical mistakes will not be penalised (unless they result in implausible answers). Think about your answer - does it seem plausible? 6. (10 points) In April of last year, the market view on the FTSE100 index from an analyst is given below: Probability Scenario FTSE100 Return 0.7 Bull 20% 0.2 Neutral 5% 0.1 Bear -30% Page 4 of 10 N1553E Theory of Investment Discuss your market view on the FTSE100 for the coming year. Make clear what your subjective probability for each of the possible market scenarios is and their corresponding returns for the index. Although it is your subjective market view, you need to defend it by the most recent macro-economic news, references and/or your history data analysis. History data is available from internet sources (for example, https://finance.yahoo.com/quote/%5EFTSE%3FP%3DFTSE/history?period1=14289696 00&period2=1586822400&interval=1d&filter=history&frequency=1d). Based on your market view, calculate the expected rate of return for the FTSE100 index and its standard deviation for the coming year

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